This China Center members-only chart shows China’s capital account in the Balance of Payments data, with positive numbers signaling credits (essentially money flowing into the economy in various forms) and negative numbers representing debits (net flows of assets held abroad). It also shows the overall balance of the capital account, which has been positive in recent years but turned negative in 2012, largely due to outbound investment by China’s large SOEs and increased Chinese lending abroad.

As is evident from the overall growth of the capital account balance sheet, cash flows over China’s borders have grown rapidly over the past decade, despite China’s wide-ranging, strict and relatively effective controls on foreign capital investment. In recent weeks, speculation that China will accelerate the opening of its capital account has gained steam, due to several small tweaks to policy. This note is intended to provide a reality check on the progress toward liberalization of China’s capital account and the likely unfolding of its reform going forward.

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